The Trump administration on Tuesday proposed a new rule that would allow people to remain on inexpensive, short-term health insurance plans that come with fewer consumer protections.
“Short-term, limited-duration insurance is a type of health insurance coverage that is designed to fill temporary gaps in coverage when an individual is transitioning from one plan or coverage to another form of coverage,” the Department of Health and Human Services (HHS) says.
Short-term health plans are already available in the United States, but under Obamacare rules, the plans cannot last longer than 90 days. The HHS proposal would allow the plans to last up to 12 months.
Under such plans, health insurers can exclude people with pre-existing conditions and charge more for certain health conditions. They would likely be more attractive to customers with fewer healthcare needs.
"Americans need more choices in health insurance so they can find coverage that meets their needs," HHS Secretary Alex Azar said in an announcement explaining the proposal. "The status quo is failing too many Americans who face skyrocketing costs and fewer and fewer choices.”
Less coverage and fraud risks
The move to expand access to short-term health insurance follows a similar proposal issued by the HHS last month to allow consumers to form their own “associations” across state lines to purchase health insurance. Both ideas were raised in response to a directive that Trump signed in October, which asked the HHS to explore coverage options are “exempt from the onerous and expensive insurance mandates” stipulated by Obamacare.
Expansion of access to so-called “skinny” health insurance plans may seem attractive to the millions of Americans who remain uninsured, but experts warn that the cheaper health plans will offer less coverage, be vulnerable to fraud, and could take healthy, profitable customers out of the Affordable Care Act risk pool. Officials from the previous administration see the proposal as Trump’s latest attempt to undermine Obamacare.
The proposals have been publicly championed, on the other hand, by chain retailers and chain restaurants, some of the nation’s largest employers of uninsured workers. Both industries have bitterly fought the Affordable Care Act and its mandate that employers provide their full-time workers with health insurance.
From so-called Obamacare surcharges on customers’ bills to cutting workers’ hours and benefits, retailers and restaurants have protested the Affordable Care Act in a number of ways.
Wal-Mart, for instance, in 2014 terminated health benefits they offered to part-time workers just as the Affordable Care Act was rolling out. “Like every company, Wal-Mart continues to face rising health care costs,” Wal-Mart said of its decision at the time.
“Skinny” plans not the answer, providers say
The National Retail Federation, which represents Wal-Mart and other retailers, has championed Trump’s attempts to repeal the Affordable Care Act and his October directive calling for insurance plans exempt from “‘onerous” mandates.
“As an industry with extremely tight profit margins, retailers are unable to absorb the added costs, and could be forced to lay off workers,” the trade group claims.
Providers who want to expand access to affordable care are doubtful that “skinny” insurance plans are the answer.
"You can always make insurance more affordable by making insurance worse,” Dr. Adam Gaffney, a pulmonologist who advocates for single-payer healthcare, told ConsumerAffairs last month.
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